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WORLDWIDE
FOREST/BIODIVERSITY CAMPAIGN NEWS
Rimbunan
Hijau's Wawoi-Guavi Timber Concession Exposed
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Forest
Networking a Project of Ecological Enterprises
8/5/96
OVERVIEW
& SOURCE by EE
Following
is a recent report of a June-July 1996 trip to the much maligned
Wawoi
Guavi timber project, located in Western Province of Papua New
Guinea. The report details how the concession's
owners are bent on
extending
control over perhaps 1,000,000 more hectares, this despite the
fact
that it is already one of the world's largest timber concessions at
several
hundred thousand hectares.
Additionally, vague contractual
promises
to "assist in" infrastructural development are shown as being
clearly
inadequate and in effective non-existent.
It is shown that minimum
allowable
volume of on site sawmilling was routinely not met, as virtually
all
timbers are exported for processing--meaning the timber operator is in
violation
of its contract (as are virtually all industrial timber
operations
in PNG).
A wide
range of environmental impacts of the project are noted including
dangerous
anti-borer chemical used prior to floating logs downriver, and
whose
labeling is in Chinese. Logging is
alleged to be occurring right up
to the
river banks, and numerous smaller streams are being blocked.
Together,
these three items profoundly threaten the water supplies of the
area. While it is noted that larger game seems to
be in abundance
immediately
after logging; much of this is due to increased accessibility
and the
long term would portend wildlife decline as habitat is fragmented
and
damaged. No attempt has been made to
identify areas of high
conservation
value and not log them, such as Wawoi Falls which is one of
the
larger waterfalls in PNG and lies within the logging area.
Under
the Wawoi Guavi timber permit landholders receive K3.20 (~USD2.00)
per
cubic metre for non-premium hardwoods.
Premium species fetch K3.96 and
are
defined in a very narrow manner. This
is a very low rate even compared
to the
rest of the country where most royalties are at least K5 and many
have
been increased to K10 -15 per cubic metre.
These figures are what
they
are supposed to be paid. It appears
they received even less as it
royalty
records indicate landowners were defrauded of premium timber
royalties
and also some of the non-premium timber royalties. Much of this
money
is paid to the landholder company, with the loggers first deducting
credits
granted to the company--the old get the landholder company in debt
trick. The "royalties paid by Niugini Lumber
have been exploitative and
unjust."
Landowners
in the northern portion of the concession have asked that the
operation
be shut down and/or renegotiated. The
PNG Government, while
acknowledging
that terms of the permit have not been followed and there is
reason,
or just cause, to shut the operation down, have indicated that they
can not
afford to do so because of governmental dependence on logging
levies. The author concludes "The review of the
Wawoi-Guavi permit has
still
to occur - for Niugini Lumber it is business as usual knowing that it
faces a
government that is unable to enforce its policies."
g.b.
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TEXT STARTS HERE:
REPORT
ON WAWOI-GUAVI TIMBER CORPORATION (WGTC)
By Mike
Wood
This
report outlines some of the results of a recent trip (in June-July
96) I
made to the Wawoi-Guavi timber concession in the Western Province of
PNG. I
also extensively use material from
William Goinau's 1995 essay 'The
Impact
of Wawoi-Guavi Logging in the Bamu area of the Western Province'
presented
as part of his assessment for 21.205 Advanced Fieldwork at the
UPNG.
The
Wawoi-Guavi concession is run by Niugini Lumber which in turn is a
subsidiary
of Rimbunan Hijau which controls around 70% of PNG's log
exports.
The Wawoi-Guavi concession was one of Rimbunan Hijau's most
productive
concession in PNG and throughout the nineties they have strongly
campaigned
to expand westward into an area of around 1 million hectares.
This
western area is known as the Makapa TRP and the Makapa extension.
At the
moment it appears that Rimbunan Hijau has failed to secure the
Makapa
TRP which was awarded in May 1996 to Innovision (PNG) a company
associated
with the state of Sabah's investment arm Innorprise.
Past
and Current Moves to expand the Wawoi Guavi concession
However
Rimbunan Hijau through Niugini Lumber staff Mr William Ong and Mr
Singh ,
is now actively seeking to extend its Wawoi-Guavi concession
westward
into areas not covered by the Makapa TRP. Any 'extension' would
presumably
involve the application of terms and conditions already
operating
in the Wawoi-Guavi concession rather than negotiating a new
agreement.
The
exact area of this 'extension' is not clear to me but could extend from
the
upper Wawoi -Aiema rivers across to the Strickland and include all land
not
covered by the Makapa concession.
1
Money, 'policy' and resource allocation decisions
While
such 'extensions' are technically impossible under the current
legislation,
this legislation is now being amended to give the Minister
considerable
discretionary powers. It has to be understood these moves take
place
in the context of a build up to an
election where incumbent
politicians
have a need to access large fund their campaigns.
It
would seem Rimbunan Hijau could easily bear any additional costs needed
to
secure an 'extension' to its Wawoi-Guavi concession. Landowners who were
supporting
Rimbunan Hijau's attempts to gain control of the Makapa TRP tell
me that
RH has already spent K6.5 million in trying to secure control of
the
Makapa TRP and its extension area.
2
Niugini Lumber as an experienced 'extender'
Niugini
Lumber has already extended its Wawoi-Guavi concession through the
addition
of Block 3 into its permit. Originally the Wawoi-Guavi concession
consisted
of two blocks. However in 1986 well prior to Rimbunan Hijau's
involvement
with Wawoi-Guavi Mr Diro then Minister of Forests allocated
Block 3
to the operators Straits (PNG) without imposing any new conditions
on the
developer. Mr. Diro allocated the resource to the developer before
there
had been any purchase of the timber rights by the state. It was not
until
the 26th of June, 1989 that a TRP
agreement was actually signed
between
the state and various people associated with Block 3. A six month
timber
licence for Block 3 was initially
granted to Niugini Lumber by
M.
Komtagarea
on the 15 th September 1989. In 1990 Niugini Lumber applied
for a
the three blocks to be consolidated into a single permit. This
consolidated
permit was granted by Jack Genia on the 10 th April , 1992.
PERMIT
TERMS AND CONDITIONS :
(1)
INFRASTRUCTURE DEVELOPMENTS
The
consolidated permit is appallingly drafted. This can be seen in the
section
concerning 'infrastructure developments'. Terms are so vaguely
phrased
that Niugini Lumber really bears no specific obligations:
"Section
4.5
The Permit
Holder shall assist in the provision of sawn timber ,
machinery
works and other construction materials for the establishment/
construction
of the following facilities
1)
Church
2)
Community Hall
3) Aid
Post
4)
Classrooms
5)
Teachers' Houses
6)
Accommodation for Aid Post Personnel
7)
Improvement/ Upgrading of existing airstrip
8)Sports
playing fields including basketball court.
...The
following villages will be the beneficiaries of the above
facilities
under (clause 4.5)
1Kopalasi
2
Musula
3Kasigi
4Haivaro
5Parieme
6Diwame
7Kubeai"
One
example of the company's attempt at local infrastructure development
can be
found about a kilometre from Bibisa village (made up of people
previously
associated with Diwame). It consists of a bare flattened site
for a
still unbuilt school for the village.
Paralleling this kind of
'partial'
development is an unworkable airstrip built close to the Block 1
campsite.
While an aid post is in operation at the Block 1 the church and
community
hall and playing fields are yet to be built.
In
reference to Kasigi ( Wawoi Falls ) the company 'fulfilled' its
obligations
'to assist in the provision of sawn timber' for school
classrooms
by delivering sawn timber some iron
roofing to the Wawoi River
and by
providing the Kasigi people with a very welcome, 15hp outboard
engine and a drum of fuel. In early 1994 the Kasigi
people were
transporting
the timber up river to Kasigi - a trip that took about 6
hours.
The Kasigi people had to make numerous trips to move all the timber
upstream.
Once at Kasigi the class rooms could not be built simply because
there
was no one there with the necessary carpentry skills to build a
'modern'
school house. I understand that this year some carpenters paid for
by the
government have actually built the classrooms.
(2)
SAWMILLING
Even
where the permit conditions are clearly expressed Niugini Lumber seems
able to
violate these terms with a degree of impunity. The following table
outlines the minimum allowable sawmill output per
year as specified in
the
permit and compares these figures with the real output from the
sawmill:
Permit
Year Minimum allowable
(m3) Actual (m3)
1
(1992-3)
30,000 11,000
2
(1993-4)
35,000 20,000
3
(1994-5)
35,000 34,000
4
(1995-6) 40,000 26,000
5
(1996-7)
50,000
?
On
these figures Niugini Lumber has consistently violated its permit.
ENVIRONMENT
(i )
Pollution - anti-borer chemicals
Niugini
Lumber's environmental officer expressed particualr concern about
the use
of a chemical spray to prevent borers destroying logs that are
rafted
down both the Wawoi and Guavi rivers to Umeda Island - the point of
export
for all logs produced in the Wawoi-Guavi concession. The exact
nature
of the chemicals being used to treat the logs is not known because
all the
labelling is in 'Chinese'.
Some of
these chemicals have been stolen and misused by landowners and
workers
as a fish poison. Two people have died as a result of eating fish
poisoned
by this chemical and a number of others have become seriously ill.
The
anti -borer is sprayed on the logs after debarking. The log ponds are
often
situated close to rivers - with Block 1 and Daiyepi both located on
the
banks of the Wawoi and Kamusi being
immediately adjacent to the Guavi.
The
effects of the chemicals leaching into these rivers is not known but
people
at Bibisa, downstream from Kamusi, told me that they have come
across
fish with sores or with discoloured flesh. Because of the pollution
from
Kamusie they say they no longer fish in the Guavi nor can they use it
to
collect drinking water.
(ii)
Riverside logging
Downstream
of the Block 1 campsite it does appear
that a lot of logging is
being
done directly from the river bank
without the construction of roads.
The
forest on the river bank forest was
pock marked with small incisions
where
logs had been pulled out by small bulldozers and then loaded into
barges
or made into rafts. Much of this land is surrounded by swamps and
may be
inaccessible to motor vehicles.
While I
was visiting Block 1 the company was under some pressure by
landowners
for this kind of logging to be undertaken on their land. The
landowners
had threatened to blockade the Wawoi if certain clan's land was
not
logged soon. This pressure for further logging was related to the
fact
that their royalty income had declined considerably with the ending of
logging
on the road accessible parts of their
land
(iii)
Streams
At
Bibisa people complained to me that while the company had helped in the
construction
of this relatively new village by sending in a bulldozer to
help
remove trees in the process the bulldozer had blocked some streams
around
the village leading to the fouling of a
potential water source,
increased
mosquitos and the death of the stream's
fish. In this area the
Guavi
and its tributaries are quite strongly influenced by tides and the
blockage
also prevented fresh water and new fish from the Guavi river,
from
entering the stream.
While
my trip was in the wet season it did seem to me that a number of
streams
were blocked by roads works and by bridges that offered inadequate
flow
through. There were a lot of slow moving or stagnant bodies of water.
Blockages
to streams are also sometimes caused by poor logging practice
where a
tree may be felled across a stream. Either the tree blocks the
stream
and/ or its foliage pollutes the stream downstream so that the fish
die.
These kind of effects are more likely to be catastrophic to the
streams
fish and prawn population in the dry season. Another practice is
that
bulldozer operators sometimes push soil over small creeks in order to
make a
path to gain access to felled timber. Sometimes they leave the
stream
blocked.
Workers
also told me that sometimes they use a bulldozer to dam a stream
just
above a pool in the stream. They would
then use the bulldozer to
scoop
out the fish and prawns from the pool. This is done without the
landowners
knowing and is not endorsed by the logging companies.
In
reference to these practices it is the
job of the company's survey team
to
check each set up after logging for these kinds of breaches. The
forestry
officials based at Kamusie are not always able to check all
'harvested'
set -ups before releasing new ones
(iv)
Fauna
While
both landowners and workers are acutely critical of the environmental
effects
of logging on streams and rivers they see the effects of logging on
major
game (pigs, cassowaries and wallabies) as largely positive. The roads
seem to
attract both cassowaries and wallabies
making them easier to hunt
and
shoot. The pigs benefit from having access to larger area of secondary
growth
than would have been the case and they find a lot of food in these
areas.
According to the landowners at Bibisa I spoke to there is no
appreciable
difference in the numbers of large game found in the area
compared
to its pre-logged state. While it is true major game runs away
while
logging operations are in progress they return after logging has
stopped.
(v)
Areas of high conservation value
Wawoi
Falls is one of the larger waterfalls in PNG and certainly has
considerable
potential to attract tourists to this area. The falls also
marks
the boundary between two distinct environmental zones - below the
falls
certain species of fish can easily be found but above the falls they
are
rarely seen. A similar environmental
boundary is also found at
waterfall
about 8km SW from Kasigi and another smaller but equally
spectacular waterfall is found about 3km north of Wawoi
Falls
The
whole of the eastern side of the Wawoi Falls is included in Block 3 of
the
WGTC concession. There is no mention in the permit of any intention by
the
company to preserve the area around Wawoi Falls or the watershed above
the
falls.
There
is an urgent need for Niugini Lumber and the PNG government to make
explicit
their commitment to preserve the forest around the Wawoi Falls
area.
(4) ROYALTIES
The
permit states that landowners will receive K3.20 per cubic metre for
non-premium
hardwoods. This is an astoundingly low rate - the usual royalty
in
other concessions during the early 90' was around K5 per cubic metre and
has
more recently increased to K10 -15 per cubic metre. Arguably the
royalties
paid by Niugini Lumber have been exploitative and unjust.
This
impression is strengthened by looking at what they pay landowners for
premium
timbers. These timber attract a royalty of only K3.96 per cubic
metre.
Moreover
the premium timbers are defined in a very narrow way and here I
list
them all:
1
Diospyros sp (from Louisiade Archipelago)
2
Dracontomelum sp
3
Pterocarpus inidcus
4
Instasia
5
Palaquim
6 Red
Planchonella
From a
brief review of the royalties that have actually been paid to
landowners
it can be seen that the landowners in some years received even
less
than the standard royalty of K3.20 for non-premium species (see years
1992
and 1993 ). It appears that in these
years the company has defrauded
the
landowners of premium timber royalties
and also some of the non-
premium
timber royalties. Arguably the company
owes the landowners back
payments
of these royalties.
Year Logs (m3) Total Royalty Implied
Royalty Premium
1990 176,073 576,021
K3.27 K13,000
1991 264,991 854,019
K3.22 K 7000
1992 289,917 901,157
K3.10 -
1993 339,755 1,084,935 K3.19 -
1994 350, 742 1,141,026
K3.25 K 19,000
1995
(June) 147,630 481,937 K3.26 K
9,500
This
figures also reveal that the Niugini Lumber is perhaps cutting a very
low proportion
of timbers that attract the premium royalties of K3.96. This
may be
a reflection of the permit's very restricted definition of what a
premium
timber is. On the figures above it seems that in some years they
cut no
premium species and in other years premium species amounted to no
more
that between 0.8% and 2.2% of the total
output.
Of
course these figures are speculative to the extent that do not provide
an
actual breakdown of the proportion of 'premium' timbers to the total
amount
of timber exported nonetheless they do document the extent to which
Niugini
Lumber has avoided paying adequate royalties on both ordinary and
premium
timbers.
Premiums
On top
of this the landowner's company
receives an additional 'premium'
payment
of K1 per cubic metre for every 'log harvested throughout the life
of the
project'. Despite the reference to trees harvested, people told me
that
landowners received royalties, including the premium payment, only
from timber
exported (see also Goinau 1995:18).
The
premium is set at an extraordinarily low level. By way of comparison in
a
recent agreement between PNG and Innoprise concerning the Makapa TRP the
'premium' is based on 7% of the FOB price. If the average
export price was
K150
per cubic metre then premium would be K10.50 per cubic metre compared
with
the Niugini Lumber premium of K1 per cubic metre.
Debt
and landowner companies
A
further problem with the Niugini Lumber 'premium' is that it is not paid
directly to the owners of the resource being logged,
but to the officially
endorsed
landowner company known as the Wawoi-Guavi Development
Corporation.
William Goinau (1995:18) further states
that Niugini Lumber
has not
always paid the full premium paid owed to the landowner company.
Instead
they have deducted from the premium any credit they have extended
to the
landowner company. Thus in 1994 the
premium due was around
K350,742,
but the landowner company only received K 103,989 because
according
to the logging company they had already extended credits of
K246,753
to the landowner company.
I want
to stress that getting the 'landowner company' into debt is a common
strategy
of logging company's interested in this area.
According to
landowners
who were supporters of Niugini Lumber, in its attempts to gain
control
of the Makapa resource, the company spent an estimated K6.5
million.
Some of this money was spent on such things as board of directors
wages
(K250 per fortnight); gifts of cash and goods (food, dinghies,
outboard
engines, sports equipment) to villages in the Makapa area; trips
to
Moresby and overseas by landowners; shopping money while in town;
payments
to people for attending meetings and payments to key influential
landowners
(reputedly in the range of K1,000 to K 10,000) to move away from
other
companies and start supporting Niugini Lumber.
Niugini
Lumber may seek to recoup this amount from the landowner company,
Batanapi,
which it established and funded. If Batanapi cannot pay the
amount
it owes then some landowners think Niugini Lumber will try and force
the
Batanapi to retrieve its debts from the royalties of the Makapa project
or it
may seek an up front cash payment from Innovision/ Innoprise.
While
this kind of indebtedness has the potential to create ties of
dependence
between the landowner company and the developer, the Wawoi-Guavi
Development
Corporation has at times acted quite independently of the
company. In April 1992 senior executives were calling
for a compulsory
review
of terms and conditions prior to the Department of Forest issuing a
new
consolidated permit for all three Blocks in the Wawoi-Guavi permit
area.
They argued that the permit holder:
1 had
not paid a fair or reasonable royalties;
2 had
failed to fulfil its obligations in reference infrastructure
developments;
3 had
been tremendously wasteful of logs which have been left to rot on the
side of
roads (and which earn the landowners no royalties because they are
not
exported).
They
argued that the landowners should be financially compensated for these
failure
to fulfil permit conditions and 'in the event the permit holder
should
elect to withdraw from his permit and operations , the landowner
shall
retain all of the assets and equipment now located in the above
stated
Blocks (1,2and 3) as full compensation (WGDC Letter to Jack Genia
April
1992).
Block
3
The
Wawoi Guavi Development Corporation was
initially the only landowner
company
recognised by Niugini Lumber. However it was dominated by a
provincial
government representative Mr Aino Keiba who reflected the
interests
of the southern landowners.
By 1993
the northern Kasua people living primarily at Waeliyo and Musula
with
some support from Kamula at Kasigi had formed the Kasua Development
corporation.
They made it clear that they did not want the 'mother' company
WGDC to
have control over any monies due to the Kasua.
They
also hoped to change the terms and conditions operating in the Block
Three
area. They sought to increase the basic
royalty to 20 kina a cubic
metre,
a fifty per cent share of the operator's profits , landowner control
of
reforestation, landowners to receive the 'premium' payments directly and
that
the landowners see and study a copy of
the agreement between the
operator
and the landowner before they sign it.
Around
this time some Wareho people had formed Bua Enterprises. In December
1993
members of this Wareho group launched an injunction against Niugini
Lumber
preventing any further work in Block 3.
While acknowledging that a
TRP
agreement was signed on 26th June 1989 between the state and people
associated
with the area of land known as Block 3, those launching the
injunction
argued that if their members did sign this TRP they did so
believing
that the document was to permit 'development' in the area without
knowing
it was a timber rights permit agreement. They sought to have the
TRP
agreement and associated permit declared void.
In the
interim the gained an injunction preventing any logging activities
in
Block 3. However by 12 May 1994 the plaintiff discontinued this action
partly
on the grounds that the Court could find nothing to injunct since at
that
time no logging was occurring in the Block and partly because there
was
some dissension amongst the landowners over whether they should pursue
the
action. Currently a further injunction is being prepared and Niugini
Lumber
is in the process of building a base camp for Block 3. It is
expected
to start operation in late August or September at the end of the
current
wet.
Government
Response
As well
as seeking an injunction Block 3 landowners also requested that the
PNGFA
issue a show cause letter to close down the operation at Wawoi-Guavi.
In
January 1995 foresters from the
Southern Regional Office were sent to
investigate
the landowners concerns and they confirmed landowners concerns.
However
the landowners from Blocks 1&2 did not want to cancel the permit,
they
merely wanted to review it. The PNGFA in a meeting at Daru in March
1995
took the view that while there were grounds for issuing a show cause
letter
it would not act until the landowners reached agreement.
However
Jean Kekedo, in her advice to the acting Minister of Forests Titus
Philemon
on the 16 May 1995 was of the view that
the PNGFA should act. She
advised
the Minister that:
'there enough violations to Permit Conditions
for the issuance of a
show
cause letter. I have asked for a show cause letter to be drafted
for my
signature... Mr Dolman had advised me that if I take the Show
Cause
Option I will end up having to suspend the project and the
country...
cannot afford suspending projects during this difficult
financial
situation the PNG Government faces. We still have to find a
compromise'
The
review of the Wawoi-Guavi permit has still to occur - for Niugini
Lumber
it is business as usual knowing that it faces a government that is
unable
to enforce its policies. The recent amendments to the Forestry Act
and the
current preparations for next year's elections do not provide an
optimistic
political context for the Block 3 landowners who are trying to
substantially
renegotiate of the terms and conditions.
###RELAYED
TEXT ENDS###
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